An order is simply an instruction to your broker. Most beginners only ever use one type and wonder why their entries feel rushed and their losses run too far. Learn the handful of order types here and you gain two things: better entries, and a stop-loss on every trade so no single mistake can sink you.
01 Two ways to get into a trade
You either trade now or you trade later. A market order enters immediately at the current price, which is what you want when you are happy with the price on screen. A pending order waits and only triggers if price reaches a level you choose, which lets you plan an entry in advance and walk away. Pending orders come in two flavours, limit and stop, and the difference is just where they sit relative to the current price.
02 Limit orders buy low and sell high
A limit order waits for a better price than the current one. A buy limit sits below the price and triggers if the market dips down to it, so you buy cheaper. A sell limit sits above and triggers if the market rises to it, so you sell higher. Use these when you expect price to pull back to a level before moving your way.
03 Stop orders trade the breakout
A stop entry order does the opposite. A buy stop sits above the price and triggers only if the market breaks upward through it. A sell stop sits below and triggers on a break downward. Use these when you want confirmation that price is moving before you commit, rather than trying to catch a turn.
04 The two orders that protect every trade
These are the most important of all. A stop-loss automatically closes a losing trade at a price you set, capping the damage so a single bad trade cannot run away from you. A take-profit closes a winning trade at your target so you actually bank the gain instead of watching it evaporate. Set both the moment you enter. A trade without a stop-loss is not a strategy, it is a hope.
Placing trades with no stop-loss, planning to close manually if it goes wrong. It almost never works. A fast move, a lost connection or simple hesitation turns a small loss into a large one. Decide your exit before you enter, attach the stop-loss, and let it do its job.
- You want to buy only if price breaks above a level. Which order type is that?
- Which single order caps how much a trade can lose?
- Does a buy limit sit above or below the current price?
Show answers
1) A buy stop. 2) A stop-loss. 3) Below the current price.
- A market order trades now. A pending order waits for a price you choose.
- Limits buy below and sell above the price. Stops trade the breakout in either direction.
- Always attach a stop-loss and a take-profit. They protect the trade whether or not you are watching.
A market order fills straight away at the current price. A limit order only fills if the market reaches the specific, better price you set, so it may never trigger at all.
It is an order that automatically closes a trade once it loses a set amount, capping your loss on that position. It is the most important habit a new trader can build.
They sound alike but do different jobs. A stop-loss exits a trade you already hold to limit a loss. A sell stop is an entry order that opens a new short trade if price breaks below a chosen level.
Further reading: Trading operations in MetaTrader 5, the official MetaQuotes documentation on order types and execution.
Next lesson: when the market moves, sessions and hours →